The British banking debacle

As noted yesterday, I visited my local banker on the anniversary of my arrival in the UK to try and get some help in the grown-up banking situation. Apparently I am now officially qualified for a proper (normal!) Visa debit card for my checking account. This is good: up to now I have been functioning on a mostly cash basis because all they would give me is a “Visa Electron” card. Wikipedia notes regarding this card, “In the United Kingdom, the card is not as widely accepted as the sister Visa Debit card, but is often issued by banks as a debit card for children’s accounts (although Barclays appears to have gone back on this, and started issuing full Visa Debit cards to customers under the age of 18)”. Right. I can verify that the thing is not accepted very many places, including ticket machines at rail stations. I am annoyed to hear that Barclays are giving normal Visa Debit cards to children under 18 but Visa Electron cards to adults with graduate degrees and substantial income. THIS IS COMPLETELY RIDICULOUS! For more on the Visa Electron saga see this BBC article. It’s discrimination, pure and simple. And while perhaps the banks can justify it on the basis of the young and poor for business reasons, they have absolutely no reason to discriminate against foreign nationals whose income is clearly stated on their work permit. This is just flat-out xenophobic behavior and should not be condoned in the UK.

So the good news is that the Visa Debit card is on the way. The bad news is that the UK is currently having a series of postal strikes so this arrival could be delayed by a substantial period of time.

I had been feeling quite optimistic that with this transition done, and the second phase of my one-two punch was an attempt to get a UK credit card. Again, I had been told that after a year in the country, I should have some sort of UK credit record established and be able to get a credit card, even one with a miniscule limit. I have applied and am now waiting for the result. I had been rejected on my first attempt, immediately after my arrival. I had been feeling quite confident that this would work this time, until I chatted with another expat who was rejected a second time after his year anniversary. So now we wait.

Again, this is completely ridiculous. Why one could not get a credit card with even a few hundred pounds limit — I would put cash to secure it — or based on a transcript of an American credit record is inconceivable. And yes it matters. My (now very well-used) American Visa is not “Chip and Pin” so it is not accepted everywhere in the UK. I cannot do any online shopping. I have to continually transfer funds back to the US, to my checking account there, to pay my US credit card. This is perhaps where the banks have us: they are earning a great deal of “fees income” from my wire transfers. So why on earth would they want me to get a local card? They’ll lose money on it!

I hate to act all American about it but some times it is tempting to think about a lawyer in cases like this.

15 responses to “The British banking debacle”

Having been an expat in the US, I can confirm that the credit history thing is the same everywhere. Even opening a bank account requires a person to have a social security number, which was just as well because I was a research fellow and had a letter from the employer to help.

I have moved across many countries so I have borne this many times.

The very strict KYC rules apply to banking globally, so while I feel sorry, I do think you are being a bit unfair in blaming the banking industry as a whole.

(I do not work in banking but just as a balancing perspective, I thought it is worth saying)

Thanks. I hope you will have some positive experiences here so you can write about them too.

I have to disagree here, either we are part of a global economy or not. The US and UK have tax treaties that essentially exclude a portion of my income (that is UK taxed) from also being US taxed; why don’t they also have banking treaties where they recognize a credit report from the other country? Or make the “global” bank accounts actually useful. I think there has got to be a better way than the current one. I’m not going to let this one rest.

NFAH: Either we are part of a global economy or not sounds like “either you are with us or against us”, your President’s immortal words from 2003 … 🙂

My point was that the US does exactly the same with everybody from outside the US.

Governments cannot sign bi-lateral treaties on banking and then leave the private sector to enforce them. Tax treaties are a different cup of tea; they are agreed and enforced by the same parties.

Governments are not governed by anti-trust/ anti-competitive laws. Whereas a banking treaty of the sort you are suggesting will require banks to participate. When they do, they will need to ensure KYC and money laundering restrictions across a cross-section of people some of whom potentially bank with competing banks. This means they will have to ask competing banks for info on their customers thereby gaining a potential advantage which violates anti-competitive laws. So such access is prohibited and therefore a treaty would be a non-starter from the word ‘go’.

There are tricks to managing these inter-country transitions. Usually having an Amex is the best bet. Get a GBP billed card in the US, using your US credit history, and link it with your UK account and use it here. I have moved countries many times, seamlessly with an Amex.

The system is not going to change. The US is the most paranoid of nations at the moment in the “global” economies. So whatever happens, the US may not be party to any such treaties as long as the ‘terror’ thing runs…

The only reason why I am saying all this here – when I do not know you at all – is because many millions have tried before you, and there is a host of reasons why things are why they are.

However, the commentary and criticism of the rhetoric is not as silly as you make it out to be with this comparison: is this a global economy? For many reasons, many people would like it to be so. The currency market is consolidating, especially with the Euro. We have to address the fact that in a global economy we are faced with global issues to do with the movement of people and money across country lines. There is a qualitative difference between the average expat worker (especially we hyper-educated types who work in essentially philanthropic fields like higher education) and a determined money launderer.

I don’t disagree that this is a more universal problem than I describe in my specific comments about the US-UK situation here.

Here’s the thing I don’t understand. To function here in the UK, I have to wire-transfer large amounts of cash to myself in my US bank account to pay for my US credit card where I have a credit record. I work in the UK and my income is here. I hate having to execute this wire transfer and it is clearly the weakest link in the system. How does this help prevent money laundering? I am clearly not laundering money when I am transferring it to myself to pay my own accounts, but why is it not simpler to allow me a UK credit card? As noted in the original post, the only thing I can deduce is that the banks are getting rich on these wire transfer fees, which are exorbitant. It would seem to me clearly worse to be constantly having to transfer money to another country, which looks more like suspicious activity but isn’t, rather than allow me a standard account here???

I have heard mixed things on the whole Amex thing. Many people have noted that although it is true that they are supposed to be the most international of cards, they are also not as widely accepted by a long shot. Here I need a Visa and I need it to be chip-and-pin. Europe is ahead of the US in using machines for transactions but they are all chip and pin. I cannot dine out without it, I cannot buy train tickets at the machines without it.

NFAH: On that ‘your president’ bit, well politicians of whatever colour have to agree to represent even those who did not vote for them. So I am afraid you all are stuck with him for now 😉 And he did nothing to make Americans more popular abroad. Wrong as it may be, perhaps democracy needs to be reclaimed in the country that exports it to others, no? I was surprised to hear a bunch of MIT and Harvard KSG folks I was hanging out with in summer of 2003 who said he is our President and he is right. This in the People’s Republic of Cambridge (Mass.)! Anyway enough digression.

In the money transfer thing: the receiving and the sending bank both can verify who you are. Which is what KYC is technically supposed to achieve.

Now for qualitative differences, both the UK and the US are learning from their recent past. Where scholars turned rogues and terrorists (one guy nominated for the Booker was a PhD student in Cambridge, my Cambridge here, yikes!!). Besides modelling qualitative factors so that the dumbass clerks at the tills does not ‘disallow’ your money transfer because the ‘computer says no’ is very hard. I moved away from my quanti comfort zone to do quali analysis in my PhD. And boy is that hard! The system is only as strong as its weakest link – and in this case it would be the bank clerks.

I am not suggesting this is acceptable; just that perhaps economic rationality suggests you look after number 1 and not waste your time fighting a war which may not benefit you, but waste your time in heaps anyway.

On the Amex thing: I find that a self-selecting bias. All supermarkets and the decent and very decent eating places I prefer accept Amex. I shop on-line for groceries, books and music etc. Everyone takes Amex. For everything else, there is cash 😉 (To cadge a line from Mastercard). Yes it sounds awful but places they do not take Amex, I do not take my custom. I am biased but I immensely prefer their service.

Good luck. Sorry it had to be like this but it is like this for nearly everyone who moves countries. You will perfect your moves soon too, just like I did. (And I have had an Amex since 1994!)

@Shefaly — maybe things have changed, but when I was in the US, in 1999 (ok, so 8 years ago) I could open a Wells Fargo account in about 10 minutes. In a classic money laundering scenario actually, I opened it, purchased what I needed (which required a US bank account), then closed it the next day!

My experience is from 2003. I was a Research Fellow at MIT, trying to open an account in the Fleet branch (now BofA) which has all those MIT accounts that are not with MIT Fed Credit Union. One would think in this duopoly there was space for being treated a tad “special” but “no can do” was the motto. The branch is so tiny that the tellers knew me and my 2 other, European colleagues by name!

The solution, of course, is to open an account with a global bank. While we may not yet live in the ideal “global economy” that would bridge the gaps between nations, banking with a global bank can provide the sort of seamless international experience that people such as yourself demand. As an example, HSBC’s Premier account provides for fee-free international transfers between same named accounts.

I am an Canadian and have been living in the UK for 2 years – I have just in the past 3 months become a resident. i have found it extremely annoying to not be able to have a debit card. I like the American find it extremly annoying to not be able to buy anything online -and have spend hundreds of pounds transfering money to my Canadian bank account to pay my canadian credit card. I am self employed now and earn a resonable living – so I suppose now that I am a resident they will give me a debit card. !!!????? I have just applied again. It makes me feel like a little kid. I don’t want an over draft – or a credit card – just a bloody bank card that i can buy online with!

I’ve worked as a banker in Massachusetts (at a BoA in Cambridge for that matter) and Illinois all after 2001 and we could absolutely open bank accounts for people without a social. All we needed was a foreign address and their reason for being in the US.